ISTANBUL - TDN with wire dispatches

Iran's elite Revolutionary Guards has begun a military exercise with a warning that Israel and the U.S. naval force in the Persian Gulf would be prime targets if Iran is attacked.
Iran started war games on Monday and its president rejected a demand by major powers that it stop enriching uranium as "illegitimate", showing no sign of backing down in a stand-off over Tehran's nuclear ambitions.
Missile units of the elite Revolutionary Guards' naval and air forces began war games on Monday, Iranian news agencies said, hours after the U.S. Navy said it had begun exercises in the Gulf, as reported by Reuters.
Speculation about an attack on the world's fourth biggest oil exporter over its nuclear program rose after a report last month said Israel had practiced such a strike. Fears of military confrontation helped send world oil prices to record highs.
The goals of Iran's war games included raising combat readiness and the capability of missile units. Exercises started a few hours ago, the Fars and Mehr news agencies said, without giving details on where the maneuvers were taking place.
The Great Prophet III maneuvers by the missile and naval sections of the Revolutionary Guards are aimed at "improving the combat capability" of the forces, Fars reported. The Guards often hold maneuvers in the Gulf.
Also on Monday, Iranian President Mahmoud Ahmadinejad said his country would not stop enriching uranium, work, which Tehran says, is aimed at generating power but which the West fears may be part of a covert nuclear weapons program.
It was Ahmadinejad's first comment on the dispute since Iran delivered its response on Friday to a package of incentives offered by world powers seeking to curb its nuclear activities. Details of the response were not made public.
"They offer to hold talks but at the same time they threaten us and say we should accept their illegitimate demand to halt (enrichment work)," Ahmadinejad told reporters in Malaysia, where he was attending a summit of eight developing countries.
So far the Iranian government's formal response to the latest offer has not been made public and there have been mixed signals in statements by its senior officials.
Senior officials from world powers held a conference call on Monday to discuss Iran's response, the State Department said.
Warning to US, Israel:
As Iran's elite Revolutionary Guards have embarked on a new round of war games to sharpen their combat readiness, an aide to supreme leader Ayatollah Ali Khamenei warned yesterday that Tehran would "set on fire" Israel and the U.S. navy in the Gulf as its first response to any American attack over its nuclear program.
"The first US shot on Iran would set the United States' vital interests in the world on fire," said Ali Shirazi, a mid-ranking cleric who is Khamenei's representative to the naval forces of the elite Revolutionary Guards.
"Tel Aviv and the U.S. fleet in the Persian Gulf would be the targets that would be set on fire in Iran's crushing response," he said, according to the Fars news agency.
Shirazi said "the Zionist regime is pressuring the White House leaders to plan a military assault on Iran" and Iran would react "if they commit such a stupidity," according to Agence France-Presse.
It was not clear if he was referring to Tel Aviv as a city or as shorthand for the Jewish state as a whole, which the Islamic republic does not recognize.